Pharmaniaga 2Q18 net profit drops to RM5.3m on higher taxes

Higher corporate taxes pushed the group’s PAT to RM23m from RM29m in the same quarter last year

Pharmaniaga Bhd’s net profit slumped to almost half for the April-June 2018 quarter compared to the corresponding period a year ago, largely due to higher corporate taxes on its subsidiaries.

For the quarter under review, profit dropped to RM5.3 million from RM9.52 million a year ago.

Revenue for the quarter under review, however, jumped to RM582.7 million, or 12.5%, compared to RM517.9 million a year ago, according to the data in its filling to Bursa Malaysia Bhd.

The company said the higher revenue was bolstered by the strong demand from government hospitals.

The company said profit before tax (PBT) rose to RM12 million from RM10 million in the same quarter last year, despite higher operating expenses.

Pharmaniaga said the improved contributions from its concession business propelled its logistics and distribution division to double its PBT to RM9 million from RM4 million recorded in the same period last year.

The group’s manufacturing and Indonesia divisions maintained their performance in the quarter.

Pharmaniaga’s year-to-date (YTD) revenue for the period ended June 30, 2018, surpassed the RM1.2 billion mark, an increase of 5.7% from RM1.1 billion in the same period last year.

Its PBT YTD grew 7.3% to RM41 million, compared to RM38 million in the corresponding period of 2017, as the group benefitted from improved contributions of both concession and private- sector businesses.

The company, however, noted that higher corporate taxes as a result of increased profitability of certain subsidiaries, pushed the group’s profit after tax (PAT) to RM23 million from RM29 million in the corresponding period last year.

Earnings per share in the period under review stood at 8.84 sen.

The board has declared a second interim dividend of four sen per share, which will be paid on Sept 18, 2018, to shareholders.

“The group’s resilient performance in the first half of 2018 is testament to our solid business fundamentals and improvements in operational efficiency. One of the corner-stones of our resilience is the strong partnerships we have cultivated with our major clients,” a spokesperson for Pharmaniaga said in a statement.

“We will build on this to enhance our market presence in the private-sector business, particularly in the consumer healthcare segment through aggressive strategic marketing initiatives,” said the spokesperson.

The group’s Indonesia operations delivered a positive performance despite the effects of ringgit depreciation and its outlook for the remaining of the year remains favourable.

Pharmaniaga is currently focused on creating synergies between its subsidiaries, PT Millennium Pharmacon International Tbk and PT Errita Pharma, as well as creating a wider market for the latter’s products.

“As the country’s largest-listed integrated pharmaceutical group, Pharmaniaga will continue to expand our product offerings in both domestic and international markets, while intensifying research and development as a key driver of growth,” said the spokesperson.